Following the lead of the European Central Bank (ECB) on Friday 31st January, the Bank of Cyprus has cut its benchmark interest rate from 3.15% to 2.9%.
The new conditions will come into effect on 5 February 2025, according to the main Cypriot financial institution.
The updated rate is expected to affect 12,000 borrowers whose loans are linked to the ECB base rate, as well as 8,000 customers using the Euribor rate. The latter, by the way, has been on a steady decline: since October 2023, it has fallen from 4.14% to 2.59%, and analysts are predicting a further fall.
According to the ECB, the average interest rate on loans to households in Cyprus will fall by 0.84% in 2024, almost double the eurozone average (0.4%). Bank of Cyprus assured that it will continue to contribute to the development of the country's economy by offering more affordable credit terms to both individuals and corporate customers.
It is recalled that last week the ECB decided to reduce its key interest rate by 25 basis points. As a result, the marginal lending rate fell to 3.15% (from 3.4%) and the deposit rate to 2.75% (from 3%).
Inflation continues to evolve broadly in line with forecasts and is expected to return to the Governing Council's medium-term objective of 2% in the course of this year. Most indicators point to a steady stabilisation of inflation around the 2% target," the Governing Council said.